Silver Recovers, But Sentiment Remains Fragile Ahead of PCE
Silver prices (XAG/USD) attempted to recover during the European session on Thursday (May 28th) after hitting a four-week low. XAG/USD was last trading around US$73.3–73.5 per troy ounce, after dropping to US$71.8 intraday.
However, this recovery is considered fragile as it is not yet supported by clear fundamental changes. Middle East tensions escalated following the US-Iran exchange of attacks, while Tehran condemned the attacks around the Strait of Hormuz, a vital route for global energy supplies. In the market, this escalation kept the energy inflation narrative "active."
In theory, geopolitics usually supports precious metals, but silver was held back as the market reduced expectations that the Fed would quickly ease policy. When energy prices are high and inflation risks rise, markets tend to expect interest rates to remain high for longer, which is less favorable for non-yielding assets like silver.
According to the CME FedWatch data you cited, the probability of the Fed holding interest rates at current levels this year is 43.1%, while the remaining percentages are leaning towards at least one rate hike. This is a reversal from expectations of a cut before the Middle East conflict. The next focus is the US April PCE release at 12:30 GMT, which has the potential to change interest rate pricing and determine whether silver's recovery continues or stalls again. (Arl)
Source: Newsmaker.id
